Bandwidth Co-op Brings Cheaper Prices
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New Mexico is now home to an ambitious fiber co-op which brings the benefits of metropolitan competition on bandwidth prices to the country, seemingly having figured out how to bring broadband into rural areassomething the RBOCs, many alternative LECs, and the federal government failed to do.
A brainchild of four New Mexico-based entrepreneurs, the co-op, which will go live on February 15, 2003, is essentially a mechanism for rural ISPs to buy transit services at competitive prices. A 45 Mbps DS-3 supporting IP from Albuquerque to Clovis, a city 300 miles away, is $8,000 a month. The same DS-3, terminated locally in Albuquerque, is $1,800, a price more typical for a major city.
The business plan underlying the co-op is to buy a DS-3 connected to the Internet in Albuquerque (the link has been already provisioned by Sprint), and then to send IP traffic out to far flung regions over an ATM network run by Qwest. Regional players can tap the ATM network via local loop in their cities.
Instead of paying $8,000 to get a 45 Mbps connection to the Internet, a regional player could get a 20 Mbps private virtual circuit from most any location in New Mexico to Albuquerque for less than $1,000. Bottom line: instead of paying up to $900 per Mbps, ISPs participating in the exchange stand to lower their bill to $200 to $400 per Mbps.
The co-op doesn't just help ISPs obtain access to higher speed connections. Many win financially by making their network design more efficient and thus lowering their existing bandwidth bills.
"With the co-op, we are doubling capacity and save $900 a month," said Dave Cates, president of I-Net of New Mexico. Cates is one of four co-founders of the co-op, along with John Brown of Chagres Technologies; John Gonzales of Tularosa Communications; and Michael Spinn of Spinn.net.